Maintenance Fees Must be Paid by the Authorized Correspondent: Why?

Unicrop Ltd. v. Canada (Attorney General) 2011 FCA 55 Noël JA: Pelletier, Trudel JJA affm’g 2010 FC 61 Boivin J

In Unicrop the FCA affirmed that maintenance fees must be paid by the authorized correspondent, and that the Commissioner is entitled, and indeed apparently required, to refuse payment from anyone else. It is difficult to argue with this conclusion, given the text of the Patent Rules; the question is why the Rules impose such a stringent requirement.

Unicrop’s representatives on filing were Bereskin & Parr LLP, who also paid the first two annual maintenance fees. The third annual fee was not paid in time and the application was deemed abandoned. Just prior to the one year grace period for reinstatement, the applicant attempted to reinstate the application through their new agent, Furman & Kallio. However, the notice of appointment of agent had not been submitted to CIPO prior to the grace period deadline [FC 27]. CIPO therefore refused to accept the fee payment, on the basis that it had not been submitted by the authorized correspondent. The Appointment of Agent form was submitted to CIPO after the deadline, but CIPO was of the view that the application could not be reinstated, as the grace period had elapsed.

The FCA affirmed Boivin J, who had upheld the Commissioner’s decision: "the relevant provisions of the Rules could not be clearer. Subsection 6(1) provides that “for the purpose of prosecuting or maintaining an application the Commissioner shall only communicate with, and shall only have regard to communications from, the authorized correspondent.” The wording of section 3.1, which deals with the late payment of fees, makes it clear that this prohibition extends to communications relating to all such payments as it operates ‘subject to subsection 6(1)’” [34]. The decision of Hughes J in Sarnoff Corp. v. Canada (Attorney General), 2008 FC 712, aff'd 2009 FCA 142 was persuasively distinguished on the basis that Hughes J, faced with ambiguous evidence, had found as a fact that the notice of appointment of agent had been received by CIPO [29, FC 20].

The Court’s analysis is entirely convincing as a matter of law, but the result is not satisfactory. As Hughes J pointed out in Sarnoff “The seemingly minor fault in having maintenance fees actually paid, received and recorded by a firm which, arguably, at the time was not the patent agent or associate agent of record, results in the wholly disproportionate result of loss of all rights to receive the grant of patent monopoly rights should the application otherwise prove to be acceptable.” [32]. It is true that the facts in Unicrop were different enough to compel a different result, but the point remains that the loss of all rights is disproportionate to the fault.

It is understandable why the deadline itself should be enforced strictly. Once the deadline has passed and the application is deemed abandoned, third parties might rely on the abandonment. To invoke discretionary or multi-factor rules for reinstatement would lead to uncertainty and difficult factual inquiries. So, both levels of court in Unicrop refused to invoke equitable principles to order the reinstatement of the application despite expiry of the deadline: as Boivin J cogently pointed out, to do so “would amount for this Court to substitute its own deadline for the one enacted by Parliament” [FC 38].

It is also obvious why the Patent Office can only communicate with the authorized correspondent in respect of patent prosecution. It is certainly understandable why communications from CIPO in respect of maintenance fees should be directed only to the authorized correspondent; the Commissioner cannot be criticized for directing its communication on any matter only to the authorized correspondent. But it is not clear why the Rules mandate such a stringent approach to communication in receipt of maintenance fee payments. The purpose of maintenance fees is to raise revenue and to discourage the proliferation of deadwood patents [23]. Neither of these purposes is impaired by accepting payment from persons other than the authorized correspondent. The purpose of requiring communication only with the authorized agent is so that the Commissioner need not decide which communication should be considered [31, quoting 2007 FC 914 [20]]. Having multiple correspondents is an administrative burden for CIPO, creates the potential for conflicting requests, instructions and responses, and the potential for lack of instructions because of uncertainty as to who would act, with the consequence of missed deadlines.” It is difficult to see how simply accepting fees that are clearly designated for a particular application can give rise to any such problems.

There are good reasons for restricting communication in either direction to the authorized correspondent in respect of all matters of patent prosecution, and in respect of communication from the Patent Office in respect of maintenance fees. It would be understandable if the drafters had these scenarios in mind, and not the fourth scenario of tendering of maintenance fees by the applicant, when drafting subsection 6(1). In that sense it is understandable why the provision is drafted as it is. But it is not evident to me what practical harm would be done by amending the Rules to allow the Patent Office to accept fees from whoever is willing to pay them.